RTTNews - Stocks are continuing their lackluster outing in early afternoon trading on Wednesday, as some traders are staying on the sidelines ahead of the announcement of the details of the Obama administration's overhaul of the regulation of the U.S. financial system.
A statement released by the White House said that the president's plan would require that all financial firms that pose a significant risk to the financial system at large are subjected to strong consolidated supervision and regulation
The White House is expected to establish a Financial Services Oversight Council to better coordinate the actions of various regulators. It will also facilitate coordination of policy between regulators and work to identify emerging risks to the system.
The plan will also require financial firms to be subject to higher capital standards, while it also eliminates the Federal Office of Thrift Supervision, considered one of the weaker regulators in Washington.
Earlier, traders digested a report on consumer prices from the Labor Department that showed a modest increase in the month of May, with the mild price growth coming in below the expectations of economists.
The major averages have shown a notable move to the upside in recent trading, reaching new highs for the session. The Dow is currently up 40.96 at 8,545.63, the Nasdaq is up 17.34 at 1,813.52 and the S&P 500 is up 3.28 at 915.25.
Despite the recent upward move by the major averages, significant weakness remains visible in a number of sectors.
Some of the day's most notable losses are being shown by banking stocks, as reflected by the 2.1 percent pullback by the Kbw Banking Index. Earlier in the session, the index fell to its worst intra-day level in over six weeks.
The weakness among banking stocks comes as Standard & Poor's lowered its ratings and revised its outlooks on 22 U.S. banks and amid concern over the effect of the Obama administration's reforms of the financial system.
Oil service stocks are also seeing considerable weakness, dragging the Philadelphia Oil Service Index down 2.8 percent. The losses by oil service stocks come amid a decrease by the price of oil, although crude for July delivery has moved well off its low for the session.
On the other hand, health insurance and pharmaceutical stocks continue to move higher on the day, with the Morgan Stanley Healthcare Payor Index and the NYSE Arca Pharmaceutical Index up by 2.6 percent and 2.2 percent, respectively.
Airline, telecom and retail stocks are also advancing on the day. The gains by retail stocks come after they helped to lead the way lower on Tuesday following disappointing guidance from Best Buy (BBY).
Stocks In The News
Despite the lack of direction being shown by the broader markets, Savient Pharmaceuticals (SVNT) is soaring after an FDA panel approved the firm's Krystexxa drug for treating gout. The stock is up by 37.2 percent on the day, adding to its recent gains to reach its best intraday level in almost eight months.
Alvarion (ALVR) is also rising after Open Range Communications selected the company for the nation's largest Rural Utilities Service funded deployment, which will span 17 states. Shares of the firm are up by 12.2 percent after reaching their best intraday price in over eight months earlier in the session.
Meanwhile, shares of E-Trade (ETFC) are moving to the downside after the firm announced the launch of a public offering totaling $400 million in common stock, prompting concern over share dilution. The stock is down by 13.3 percent, retreating to its lowest intraday price since late May.
In Focus: Consumer Price Data, Earnings, Fed Buyback
Consumer price data from the Labor Department showed that prices edged up 0.1 percent in May after coming in unchanged in April. Economists had been expecting a somewhat more substantial increase in prices of about 0.3 percent.
Core consumer prices, which exclude food and energy prices, also edged up 0.1 percent in May following a 0.3 percent increase in April. The modest increase in core prices came in line with economist estimates.
On the earnings front, FedEx (FDX) reported fourth-quarter adjusted earnings of $0.64 per share, beating analyst estimates of $0.51 per share. However, the firm also forecast first quarter earnings ranging from $0.30 to $0.45 per share versus estimates of $0.68 per share.
The Federal Reserve continued its treasury buyback program Wednesday, completing its second quantitative easing move of the week. The New York Federal Reserve purchased $7.0 billion worth of securities with maturity dates ranging from May of 2016 to May of 2019.
The day's buyback saw a total of $26.2 billion in treasuries submitted for the purchase. Overall, the Fed has purchased a total of $169.97 billion since the program began on March 25th.
In overseas trading, stock markets across the Asia Pacific region ended Wednesday's trading on a mixed note. Japan's benchmark Nikkei 225 Index closed up 0.9 percent, while Hong Kong's Hang Seng finished down 0.5 percent.
Meanwhile, the major European markets all closed firmly in the red, with the French CAC 40 Index and the German DAX Index falling by 1.6 percent and 1.9 percent, respectively. The U.K.'s FTSE 100 Index also finished notably lower, dropping by 1.2 percent.
In the bond markets, treasuries are surging, helped higher after the announcement of the Fed buyback. Subsequently, the yield on the benchmark ten-year note is trading at 3.595 percent, down by 7.9 basis points on the day.
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